Members of a company are often responsible for its

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take decisions for the company and carry out its activities. Members of a company are often responsible for its formation, formulation of the purposes of the company and drafting or adopting its articles of association. Members, especially the founding ones, therefore set the general tone of a company’s business, while existing members at any time are responsible for effecting changes in its constitution and appointing and removing directors. Members of a company also retain the residual powers of the board and may exercise these when there is no proper board of directors or when there is a deadlock in the board. Thus, members of a company have control of the company while directors have the responsibility for management. Both powers may, however, be held by the same people, especially in private companies where the same persons are often the members and shareholders. Download free eBooks at bookboon.com Click on the ad to read more Free eBook on Learning & Development By the Chief Learning Officer of McKinsey Download Now
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BUSINESS ORGANISATIONS AND AGENCY 401 COMPANY MEMBERS 22.2 LEARNING OBJECTIVES The objectives of this chapter are to show: • Who the members of a company are • How a person could become a member of a company • The rights and powers of members • How membership of a company may be terminated • The types and purposes of meetings members may have • The legal requirements of members’ meetings • How members take decisions and the types of decisions they take 22.3 MEMBERSHIP OF A COMPANY Members of companies may be natural persons or legal persons, i.e., companies. Every company must keep a register of its members . The register should contain the names and addresses of the members, the type and number of shares owned by them, the amount paid for the shares, and the dates of commencement and end of membership. A company having more than 50 members must also keep an index of all its members – s. 115 CA 2006. Every shareholder is entitled to receive a share certificate within 2 months of becoming a member as evidence of the shares held in the company, except where the shares are uncertificated – s. 768 & 769 CA 2006. The certificate, however, is not a title document. It is evidence of title. A person ceases to be a member of a company by death, bankruptcy, sale, transfer, forfeiture, or surrender of shares, or by the liquidation of the company. Membership of a company may arise in the following ways. 22.3.1 SUBSCRIPTION TO THE MEMORANDUM OF ASSOCIATION The first method of becoming a member of a company is by subscribing to the memorandum and articles of association during the formation of the company. A subscriber to a company’s memorandum is deemed to have agreed to become a member of the company and to have his name entered in the company’s register of members – s. 112 (1) CA 2006.
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  • Fall '19
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